The 25 Percent US Tariff Policy Threatens To Increase Drug Prices By 12.9 Percent In The Market
JAKARTA - A report commissioned by the United States (US) pharmaceutical trade group revealed that the imposition of drug import rates of 25 percent by the US could increase drug costs in the country by nearly 51 billion US dollars per year. If the cost is fully charged to consumers, the price of drugs in the US could potentially soar to 12.9 percent.
According to Reuters, Saturday, April 26, an analysis conducted by Ernst & Young showed that the US imported pharmaceutical products worth US$203 billion in 2023. A total of 73 percent of these imports came from Europe, especially Ireland, Germany, and Switzerland. Meanwhile, total sales of finished drugs in the US in the same year reached US$93 billion.
The report, which is dated April 22 and has not yet been published, was initiated by the main lobby of the US pharmaceutical industry, Pharmaceutical Research and Manufacturers of America (PhRMA), whose members include major companies such as Agen, Bristol Myers Squibb, EliTOR, and Pfizer.
PHRMA itself has not commented on this report. However, the group has previously stated that tariffs will undermine efforts to increase domestic manufacturing, a goal echoed by US President Donald Trump.
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Pharmaceutical products have been relatively safe from trade wars given the potential losses they cause. However, Trump has repeatedly threatened to impose a drug import rate of 25 percent.
Last week, the Trump administration announced an investigation into pharmaceutical imports citing national security concerns over its dependence on foreign drug production. The move sparked a 21-day public comment period as part of an investigation led by the US Department of Commerce.
Drug manufacturers see this investigation as an opportunity to show the government that high rates will hinder their efforts to accelerate production in the US. They also plan to apply for another alternative, according to Ted Murphy, a trading lawyer at law firm Sidley Austin who advises companies regarding their filings to the Commerce Department.
Pharmaceutical companies have also lobbied Trump to impose import rates on pharmaceutical products in stages in hopes of reducing the impact of these costs.